Government receives 4,000 emails on black money in 72 hours


The government’s email address for black money tipoffs has been flooded with 4,000 messages since Friday, when blackmoneyinfo@incometax. gov.in was made public. “We are getting a good response,” a finance ministry official told ET, Further the Finance Department also gets intelligence reports from various other module too.
That’s in addition to vast amounts of data flowing to tax authorities and other investigative agencies on a daily basis about deposits in bank accounts and other undeclared income through the Financial Intelligence Unit (FIU), part of the finance ministry. The government is already acting on the FIU information. “The system is capturing a lot of data,” the official said. “We are able to get daily reports on deposits made and that is the reason agencies have been able to carry out focused action.”

The allegations contained in the emails will boost the government’s ongoing efforts to root out black money.   Income tax and enforcement directorate officials have been conducting raids across the country unearthing old and new currency apart from jewellery and other high-value items. Several bank officials have also been detained, suspended or sacked for swapping old notes with new without authorisation. The information received relates to deposits in Jan Dhan and urban cooperative bank accounts, loan repayments, credit card payments, electronic transfers, withdrawals, among others.

Information also poured in regarding high-value purchases including jewellery, luxury goods and realty. Companies showing high cash balances could also come under the taxman’s radar.

Given the amount of data the government has, the belief that all money deposited in banks has been converted into legitimate wealth may be misplaced as banks have been taking note of unusual deposits and alerting authorities.

 

FORMS OF BLACK MONEY – CASH – GOLD AND PRECIOUS METALS – PROPERTIES – STOCKS AND SHARES – MONEY STASHED ABROAD BY POLITICIANS, BUSINESSMEN, SMUGGLERS AND TERRORISTS


An expert`s view on demonetization.

Which are the other forms of Black Money?

Gold, Precious Metals, Properties, Shares, Stocks and stashed abroad in tax heavens.

Which are the major tax heavens in the world?

Delaware (U.S), Luxembourg, Switzerland, Cayman Islands, the U.K. (City of London), Ireland, Bermuda, Singapore, Belgium and Hong Kong.

An expert on black money has said that removing liquidity from the economy via demonetisation is unlikely to have an impact on the generation of black money, though it may send the economy into a tailspin.

“Cash is like blood throughout the economy and if you suck out 85 percent of the blood from somebody and replace it with 5 percent of the blood that person will collapse,”

Cash is used in India for business, trade, industrial and household transactions. All these sectors have been affected by the demonetisation of 500 and 1,000 rupee banknotes,

The rationale behind demonetisation was to strike at the roots of black money.

But, It is estimated that cash is a tiny fraction of India’s domestic black economy, not more than 2-3 percent.

The size of India’s economy is currently $2.2 Trillion, or about 150 lakh crore rupees.

Out of this 62 percent, or about 93 lakh crore rupees is generated as black income every year.

It is estimated that only 1 percent of all the black wealth in the economy is in the form of stacks of cash in suitcases, safes and gunny bags.

This amounts to just Rs 2-3 lakh crore, which is the amount that demonetisation has liquidated. It may be around Rs.5 -6 lakh crores or may be 5% of the entire black money.

“For uncertain gains it has put the entire economy in jeopardy,”

The Government has just begun its operation on a small scale on the black money with demonetization and the next program is on Benami Properties and Gold. 

The investigation into the amounts stashed abroad in tax heavens is VERY HUGE.  Un imaginable.

This money flows back to india in the form of reinvestment!!!!

It is said that many businessmen export junk or waste products and raise the invoice for huge amounts, by bringing back the stashed money abroad.

There are many ways, by which the exporters can get more than what they have shipped.

Take for example: (a small case).

An exporter gets an order for pure silk fabrics from his contacts abroad for the shipment of pure silk fabrics at $10 a meter.  He ships waste or junk with the connivance of xxxxxxxx and raises the invoice at the rate of $10 a meter.  The moment, he gets the order, he applies for the replishment quota to import Chinese yarn, to manufacture the product in India and imports china pure silk yarn at Rs.1,000/- a kilogram.  The imported Chinese yarn is sold in the open market for Rs.3,000/- to Rs.4,000/- a kilo gram.  He pockets Rs.2,000/- to Rs.3,000/- a kilo gram in black money.

Then, buys the junk or waste and books the xxxxxxx and it is exported as pure silk.  The value of the junk or waste fabrics is 10 paise to 20 paise per meter or it is based on the weight.

Thus the tax evader exports pockets crores.  The whole business world knows about it.  Even the government has details, knowledge and information about it, but NOBODY DOES ACT. 

In a similar fashion, the gold trade or export is done.  There are various other means, wherein, black money is generated.  The government has all the details about it, but cannot or did not act till date.

This demonetization may be a beginning, must be continued with benami properties, gold and detection of amounts deposited abroad.

The rest of the black wealth is in the form of gold, real estate, stocks and shares, or just stashed abroad in tax havens.

Around 40 percent of the black money stashed abroad comes back to India via ‘round tripping’.

Illicit money that has been ferreted out of India via hawala channels or trade mis-invoicing is deposited in international tax havens. From there the money comes back to India via an investment route like Mauritius, which has favourable tax treaties with India. Black money is now effectively ‘whitewashed’.

 

BUYING A PROPERTY WITH CASH – TRANSACTIONS ABOVE RS.20,000/- MUST BE ONLY THROUGH CHEQUES AND DEMAND DRAFTS.


THE GOVERNMENT HAS FINALLY COME OUT WITH A NOTIFICATION RESTRICTING THE TRANSACTIONS IN THE PROPERTY IN TERMS OF CASH BY PERMITTING IT TO RS.20,000/-. ANY AMOUNT PAYABLE OR TO BE PAID MUST BE ONLY THROUGH AN ACCOUNT PAYEE CHEQUE/DEMAND DRAFT/PAY ORDER/BANK TRANSFER/RTGS.

THE TRANSACTION IN CASH INVOLVES HIGH RISK AND THE BUYER WILL BE AT THE MERCY AND  in THE CLUTCHES OF THE SELLER/AGENT/BROKER AND THERE IS ALWAYS A CHANCE FOR THE INCOME TAX SCRUTINY.

IT IS ADVISED TO TRANSACT ONLY THROUGH BANK TRANSFER/ACCOUNT TRANSFER/RTGS/DEMAND DRAFT AND CHEQUES TO AVOID FRAUD AND BLACKMAIL BY THE SELLER AND HIS AGENTS.

CONVERSION OF BLACK MONEY/ASSETS STASHED ABROAD WITHIN 30-09-2015 AND GET AMNESTY – A NEW SCHEME TO BRING THE BLACK MONEY ABROAD !!


Dates For Compliance Window Under Black Money Act Notified; 30th September, 2015 is the date on or before which A Person may make a Declaration in respect of an Undisclosed Asset Located Outside India Under the Compliance Provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015;

Last Date by which a Person must pay the Tax and Penalty in Respect of the Undisclosed Foreign Assets so Declared shall be the 31st December, 2015.

The Central Government has notified the 30th day of September, 2015, as the date on or before which a person may make a declaration in respect of an undisclosed asset located outside India under the compliance provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (‘Black Money Act’).

The last date by which a person must pay the tax and penalty in respect of the undisclosed foreign assets so declared shall be the 31st day of December, 2015.

Detailed features of the compliance window are notified separately.

This is in tune with the announcement made by the Union Finance Minister Shri Arun Jaitley, in his Budget Speech this year, that a comprehensive new law to deal with black money stashed away abroad would be enacted. The Bill to enact the proposed new law was passed by the Parliament in its Budget Session. The Bill received Presidential assent and became law on 26th May, 2015. The Act provides for separate taxation of undisclosed foreign income and assets. Stringent penalties and prosecution, including rigorous imprisonment upto ten years and penalty equal to three times of the tax have been prescribed for violation. The Act also provides a compliance window for a limited period to persons who have undisclosed foreign assets which they have not disclosed for the purposes of Income-tax so far.

BLACK MONEY BILL IN THE CURRENT SESSION – JAITLEY – NO CASH TRANSACTION IN PROPERTY MATTERS ABOVE RS20,000/-


BUDGET HIGHLIGHTS ON CURBING THE BLACK MONEY MENACE BY THE FINANCE MINISTER

The Union Finance Minister Shri Arun Jaitley has said that a Bill to enact a new law to deal with black money is to be introduced in the current session of the Parliament. In his Budget Speech in the Lok Sabha here today, giving details of proposed key features of the law, the Finance Minister said this is the first and foremost pillar of his tax proposals. Shri Jaitley said there will be a provision for rigorous imprisonment upto 10 years for concealment of income and assets and evasion of tax in relation to foreign assets. Such offence will be made non-compoundable. A penalty for such concealment of income and assets at a rate of 300% of tax is also proposed. Non-filing of return/filing of return with inadequate disclosures is to attract a punishment of rigorous imprisonment upto 7 years. Entities, banks, financial institutions including individuals are liable for prosecution and penalty. Any date of opening of foreign account would be mandatorily required to be specified by the assessee in the return of income. The Foreign Exchange Management Act, 1999 (FEMA) and prevention of Money-laundering Act, 2002 (PMLA) are also to be amended.

The Minister asserted that tracking down and bringing back the wealth which legitimately belongs to the country is his government’s abiding commitment to the country. He said several measures have been initiated in the last 9 month to effectively deal with the problem of black money.

Shri Jaitley said all this is aimed at job creation through revival of growth and investment in domestic manufacturing and ‘Make in India’, to benefit the middle class taxpayers and to improve the ease of doing business in a climate of minimum government and maximum governance.

The Finance Minister also said that a more comprehensive Benami Transactions (Prohibition) Bill will also be introduced in the current session of the parliament to achieve the objective of curbing black money. Elucidating details he said quoting of PAN is being made mandatory for any purchase or sale exceeding the value of Rs 1 lakh. There will be prohibition on acceptance or payment of an advance of Rs 20,000 or more in cash for purchase of any immovable property.

Money laundering by Multinational Banks – Allegations


A sting operation conducted by an online magazine Cobrapost across various branches of private banks has revealed how bank employees are accepting black money from customers to convert them into white money. Cobrapost Editor has insisted that leading private banks like HDFC Bank, ICICI Bank and Axis Bank are involved in this money laundering.

The Cobrapost report said its undercover correspondent approached executives of the three banks across the country over five months – in many cases as a walk-in customer – pretending to work for a fictitious politician who wanted to launder money.

Through its website alleged that HDFC Bank, ICICI Bank and Axis Bank Ltd were involved in a “nationwide money laundering racket”. Cobrapost.com said it had unraveled the fraud through undercover investigations at several branches of these banks and their insurance affiliates.

Further it claims to have caught on camera an expose that allegedly proves that some of the largest private sector banks in the country help in money laundering. According to them, HDFC Bank, ICICI Bank and Axis Bank were part of a vast money-laundering racket.

“The brazen criminal activity by these banks is channelizing vast amounts of black money into the regular banking system as laundered white money,” said CobraPost, which conducted the sting spanning several months in various bank branches throughout the country.

The sting alleges that banks and their managements systematically and deliberately violate several provisions of the Income Tax Act, FEMA, RBI regulations, KYC norms, the Banking Act and Prevention of Money laundering Act (PMLA) with utter disregard to consequences, driven by their desire to boost cheap deposits and thereby increasing their profits.

Earlier in the day, investigative website Cobrapost, which made this sensational charge, said such illegal conversions, called money laundering, are being done with the full knowledge of the senior managements of the three banks.

This is what the Cobrapost release said on the likely response from the banks to the expose,“When confronted with irrefutable evidence, the PR spin machines of the banks are likely to go into over drive and claim that ‘these cases are aberrations and isolated’, or that ‘the tapes are doctored’, or that ‘we will look into the matter and take action’.

The media report said money laundering services were being offered practically as a standard product across the country. These money laundering services were being openly offered to even walk-in customers who wish to launder their illicit money.

The Reserve Bank of India on Thursday asked ICICI Bank, HDFC Bank and Axis Bank for information on allegations that they were helping customers convert black money into white as a standard service.

RBI deputy governor said: “We have been in touch with the banks and have asked for information on the matter.” The apex bank is expected to follow this up with a formal notice soon.

Reacting to the allegations, the three banks announced their own investigations into the matter.

“ICICI Group conducts its business with the highest level of compliance to legal and regulatory requirements. All employees of the group are trained and required to adhere strictly to the group code of conduct, including anti-money laundering and know your customer norms.” the ICICI Bank spokesperson said.

“Segregation of frontline sales activities and back-office operations and post-transaction monitoring processes are in place to ensure independent checks and balances and adherence to all the laid down policies and procedures of the bank,” HDFC Bank said. “Any deviation is viewed very seriously and stringent action is taken both at an organizational and employee level.” Any deviation is viewed very seriously and stringent action is taken both at an organisational and employee level. We would like to assure our customers and other stakeholders that the bank has always adhered to the highest standards of compliance and corporate governance and will continue to do so,” it added.

Some Banks which are said to have been involved in this scam, also issued similar statements.

The Reserve Bank of India (RBI) is expected to take a closer look at the guidelines on transfer of funds and know your customers (KYC) following an exposure by cobrapost.com allegation that private banks are helping individuals convert black money into white money. The likely exercise would aim at covering any loophole that results in money laundering.

RBI may seek detail report from private banks involved on the big-ticket cash transactions. Alternatively, they could also conduct on-site inspection at a short notice to verify books of private banks.  This apart, RBI may also take a closer look at KYC guidelines for co-operative banks since the exposure by cobrapost.com alleges that it is easier to route money through co-operative banks to convert it into white money. Co-operative banks come under dual jurisdiction of state government and RBI making it difficult for RBI to effectively regulate it.

So far, the RBI has officially not issued any statement regarding the allegation made by cobrapost.com however in the past RBI has fined several banks for their failure to meet the KYC norms.

ILLICIT OUTFLOW OF CAPITAL FROM INDIA


India is ranked as the decade’s 8th largest victim of illicit capital flight and the Indian economy suffered $1.6 billion in illicit financial outflows in 2010, capping-off a decade in which it experienced black money losses of $123 billion, according to a new report by Global Financial Integrity, a Washington-based research and advocacy organization.

The REPORT Titled “Illicit Financial Flows from Developing Countries: 2001-2010,” found that all developing and emerging economies suffered $858.8 billion in illicit outflows in 2010, just below the all-time high of $871.3 billion set in 2008-the year preceding the global financial crisis. “While progress has been made in recent years, India continues to lose a large amount of wealth in illicit financial outflows,” said GFI Director Raymond Baker.

“It has very real consequences for Indian citizens. This is more than $100 billion dollars which could have been used to invest in education, healthcare, and upgrade the nation’s infrastructure,” he said. A Nov 2010 GFI report, “The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008,” found that the Indian economy lost $462 billion to illicit financial outflows from 1948 through 2008.

Authored by Kar, the report measured India’s underground economy as 50 percent of GDP, with cumulative illicit outflows accounting for an increasing share of the total underground economy. The new GFI study also estimates the developing world lost a total of $5.86 trillion to illicit outflows over the decade spanning 2001 through 2010.